Right sourcing


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Right sourcing

  1. 1. Declan Kavanagh, MD of Insight presents an approach to ensure successful performance and delivery in outsourcing projects. Right-sourcing: Aligning your performance with your supplier. 2. What is outsourcing?1. Paper Summary process and product working transparently with your When a company decides thatSoftware developer organization where the vendor there is some activity that itorganizations can no longer carries out tasks and projects on wishes to have a supplier carryignore that there are specialist site, and on their premises (near out rather than use its ownsoftware QA & Test suppliers in and far shore). Key Phases are internal resources it is in effectthe market who because of their Readiness, Mobilization, outsourcing the activity.core competencies, processes Transition, Ramp, and ongoing The scope of outsourcing in theand locations can deliver faster, operations. software development worldcheaper and better results than can be small or large and maythe internal test and QA 1.1 Key Points; include the following:department. • A blend of in sourcing, near 1. The full development lifeHowever we have all heard of and far shore outsourcing is cycle from Business Analysisthe war stories of outsourcing to most effective for results, the to Maintenancefar shore locations where the profile of the blend is 2. Any part(s) of that life cyclesupplier failed to deliver the adjusted over time as the a. Business Analysisresults expected and information relationship, performance b. Designflows were less than acceptable. and business goals change. c. Development • A critical success factor is d. TestThis paper discusses an knowing when your e. QAapproach that can minimize the company is ready to f. Maintenance andrisk and ensure the planned outsource software QA & Test supportbusiness value is realized for your and where to start. 3. Any component(s) of theorganization when handing over • Partnering with the right selected activity(s)key software QA and Test tasks to supplier and managing a. Task(s)a 3rd party (Or equally a remote service levels is essential to b. Activity(s)operation within your own ensuring successful delivery c. Project(s)organization). Right-sourcing is of results. d. Department/Functionabout best practice people, e. Process f. People g. Systems© Insight Test Services 2005 1
  2. 2. The considerations, techniques create and/or enhance its conditions which may be unclearand approaches proposed in this competitive advantage in the or unpredictable such as:paper can apply to any chosen marketplace it operates. Somescope of activity, they can be strategic reasons that may be • Demand is un clear and suffersapplied to a situation whereby considered are: from peaks and troughsan organization or operation is • A particular skill set is untransferring an activity to another • The organization wishes to available internally and needspart of their corporate concentrate on its own core to be developed or is only aorganization, or to a 3rd party or business and competencies short term needwhere they are reviewing their which differentiate it and • The deliverable requires aown role in the market they deliver competitive particular standard oroperate whether it be internal or advantage. performance, accreditation orexternal. The focus of this paper • The organization recognizes certification that can beis of course on the area of that software QA, Test and supplied by a 3 rd partysoftware QA, Test and Validation Validation which may be very • A specialist asset, such as important to the business is not equipment or software is a core competency and a 3 rd required but purchase, training party organization may be and support is not justified with able to deliver, faster, cheaper a business case and with higher quality because software QA, Test and Validation is their core business 2.2 Why do companies • The organization wishes to engage in outsourcing? create an extension of their capability and capacity by There are many reasons, whether engaging with a strategic they be strategic and/or tactical partner underpinning these reasons will • The organization may want to be a desire to enhance sharpen their processes, get competitive advantage in the2.1 The reason and goals for more standardization and get marketplace and createoutsourcing an outsider view. stakeholder value. A Cap Gemini Ernst and Young paper indicatesStrategic the following drivers: TacticalStrategic outsourcing relates to a • To Realise Cost Savingsdecision and plan that are Tactical outsourcing tends to be • Lack of IT Staffintegral to a company’s long more short term in its nature and • Lack of Expertiseterm strategy, and designed to driven by business and market • To Improve Efficiency© Insight Test Services 2005 2
  3. 3. • Get Access to Broader Skills • Loss of Control/Visibility • Enhances Capability, Base • Choosing the Right Partner Flexibility and Responsiveness• Deliver a Better Service • Reliance on Suppliers • Reduced Fixed Costs• Focus on Core Business Caused By: In addition we suggest based on • Clarity on the goals andIn addition we suggest based on our experience that relating to objectivesour experience that relating to software QA, Test and validation • Goals and risks shared bysoftware QA, Test and validation the following are also drivers: partner supplierthe following are also drivers: • Excellent communications • Knowledge acquisition and and relationships• To have a 3 rd party maintenance • Readiness for out sourcing independent contribution • Environment consistency (Robust, Reliable & visible to stakeholders • Loss of Flexibility Predictable Process)• As a route to drive process, • Transition & Management • Clear roles and performance performance improvement overhead Overhead standards and best practice And most importantly in recent years following Negative scandals in major • Delivery and Quality un international industries both in predictable the private and public sector • Rigid scope and “ Regulatory Compliance” documentation such as SOX, FDA, GAMP4, conformance Basel 2 etc • Lack of innovation, creativity and experience • Management effort and 2.4 What are the experiences overhead more than business has had with expected outsourcing? • Rework and Duplication • Loss of flexibility and Positive responsiveness2.3 Concerns companies • Cost reduction and hence Caused by:have with out-sourcing profitability improvement • Big bang over the wall • Enhanced services levels outsourcingFrom the same Cap Gemini Ernst internally and to end clients • Insufficient focus onand Young survey, the key • Integrated and transparent relationships andconcerns are as follows: operations development• Security/Confidentiality© Insight Test Services 2005 3
  4. 4. • Poor readiness for (Process Maturity, Product provide on site, near shore and outsourcing stability, Development far shore capability. There are a• Overselling by supplier quality, staff buy in and number of phases that are• In effective out sourcing expertise) followed; each phase has a set process 3. Relationships: Formal and of time lines and performance• In experience on both sides informal at many levels need standards.• Lack of awareness of cultural to be formed for the differences partnership to really perform effectively. These2.5 Critical Success Factors relationships are of course underpinned by pragmaticWe conclude this section by service level agreements,summarizing what we believe best practice process andthe critical success factors are: effective Management information which are all1. Goal Clarity: Having clear essential to guide both goals in the business and organizations. operationally, shared with the 4. Financial Synergy: There has stakeholders in the business. to be a win –win for both In addition having and plan parties the supplier needs to and operational process that feel that his customer is a is flexible to respond to high value customer so he is 3.1 In-sourcing (Phase 1) changes in customer, willing to invest in that client supplier, partner and market and make a profit. The buyer Ideally the proposed supplier needs. needs to see real takes responsibility for a project2. Readiness: A poor track competitive advantage from on site initially. The objectives of record of delivery the supplier. this Phase for the supplier working performance (e.g. cost, with your organization are as schedule and quality) will not follows: be solved by jumping straight 3.0 Right-sourcing to outsourcing the next 1. Deliver a specific project / project. An essential Right sourcing is an approach Release in line with your ingredient in creating a designed to ensure that the companies business successful outsourcing critical success factors relating to objectives. relationship is to ensure that setting up a strategic or tactical 2. Provide key team members current product and process partnership are addressed and who will be part of off site are moved towards best that the risks of the change are delivery to work on project practice performance minimized. Right sourcing and learn requires a supplier who can© Insight Test Services 2005 4
  5. 5. 3. Establish overall readiness 3.2 Transition to Offsite (Phase 2, 3.3 Ramp phase (Phase 3) and actions needed for a near and/or far shore) smooth transition. On completion of Phase 1 the On satisfactory completion of4. Best Practice process processes, skills, systems and Phase 2 Pilots and over time definition and interface relationships are in place to carry more and more of the activity process definition out some subsequent projects off can be carried out at the off5. Allow customer work directly site. shore low cost location, this with the supplier. would include more The blend of activity can be projects/products and higher structured to include on site, value test design and near shore and far shore management activity. depending on the businessThis phase in effect is a value conditions that exist at the time. Eventually the blend changesadd due diligence for both Key considerations are as follows. with the majority of routine testparties and has the following and QA activity carried out offbenefits: • The supplier owns the shore and the supplier providing deliverables and local or on site capability for new1. The supplier provides a performance products, technologies which business deliverable while • The supplier has on site or are really at phase 1. Subsequent completing training and local project management phases are about refining the process readiness. • The location of activity is virtual test centre of2. Direct relationships are reasonably transparent competence, leveraging the established face to face • A Pilot project or two are skills and assets across each3. The planning for the transition completed off shore where location and driving phase becomes interactive all processes, systems and performance improvement. and informed by the real performance are validated world operational situations in • Initial Test Strategy and both companies Design is completed by the4. A pragmatic service level supplier on site or near shore agreement and and Test execution or test improvement plan can be automation script put in place. development work packages5. At the end of the phase the are assigned to far shore client will have a process and operation. set of best practices that indicate readiness to near or far shore as appropriate.© Insight Test Services 2005 5
  6. 6. 4. Key Processes & Systems • Source code control and 5.1 What should you look for configuration management in a supplier?4.1 Processes • Defect reporting and tracking system ideally integrated with • Their core competence andIn order for any right-sourcing the test management tools capability is software QA, Testrelationship to be effective it is • Test Automation tools and Validationessential that the key processes (Functional and Non • They can demonstrate aare agreed, defined and Functional). knowledge of best practicedocumented: • They have a track record of similar successful projects• The development process and • You meet the key people methodology 5.0 Supplier selection and and feel comfortable with• The test process through the life management them cycle • They are committed to taking• The source code and There are many considerations ownership and sharing risk configuration management when seldctingh a supplier to be • They have a clearly defined process right sourcing partner. It is best to process and approach• The release process internally define the requirements of a • They have a local presence and externally supplier in an RFQ. This is not and project management• The defect and fix intended to go into detail, but • Their commercial model is fair management process just highlight some of the key • They are flexible, responsive• The Test environment features that should be in the and collaborative during the management process definition of requirements. sales and negotiation• The communications and process as an indicator they escalation process are easy to work with. • Statement of business goals• The change control process • They demonstrate where and objectives they can add value • Statement of business4.2 Systems & Tools immediately and over time conditions • Statement of contractKey systems that need to be in requirements 5.2.1 Supplier selection andplace support the above • Deliverables management processprocesses • Schedule • Any available estimates 5.2.1 Selection• Test Management System to • Quality standards manage test development, • Contract Terms & conditions • Profile of supplier execution and results with • Details of the evaluation and • Request for proposal traceability end to end selection process • Proposal evaluation • Meeting and Presentation© Insight Test Services 2005 6
  7. 7. • Short List 6 What the supplier will be and they also serve to provide• Audit looking for? some protection to both parties.• Selection• Pilot Project A good supplier will be asking The service level agreement(s)• Service Level Agreement questions that verify your are the most important• Contract readiness to right-source; they document as they are the day to will have specific interest in: day management documents5.2.2 Management that assist the teams in both • Current process maturity organizations understand what is• Frequent status reports • Current performance required, when it is required and• Interim deliverables • Complementary processes how it will be delivered.• On Line metrics and • Levels of development test information • Development and Test These service level agreements• Deliverables Strategy and methodology may be appended to the overall• Effort • Interface processes contract or master service• Quality Indicators • Information requirements agreement:• Schedule conformance • Certifications and standards• Forecast required 6.1 Contract schedules or• Issues • Style of management and SLA’s• Visits and audits operation 6.1.1 Service level agreements• Quarterly formal reviews • Where they can immediately add value and where they The purpose of the service level can add value over time agreements is to define in more • Win – Win profit strategy (do detail the operational aspects of both parties benefit) a specific work package, project or function. They act as a guide for both parties on what has to 7 Contracts and agreements be delivered, how, when and the performance standards. They Any professional business in effect become a schedule to relationship should be regulated any master service agreement or by formal agreements that are contract, and allow flexibility and legally binding. responsiveness to both parties to respond to the day to day The value of these agreements business needs and changes. are mainly at the start of the They also remove the need for relationship as they serve to lengthy and complex clarify both parties expectations negotiations each time there is a© Insight Test Services 2005 7
  8. 8. new work package or 6. Primary contact and 6.2 Master Agreements andRequirement. escalation points Contracts 7. CommunicationsThe key components for inclusion a. Report frequency and The masterin the SLA are: content agreements/contracts govern b. Meeting frequency, content the overall relationships between1. Deliverables and channel the parties and provide legal a. Statement(s) of work c. Performance metrics protection to both parties as well b. Test and QA strategies 8. Dependencies as recourse in the event there is c. Test Plans 9. Assumptions a breach or failure to perform. d. Definitions 10. Capacity plan if needed The main sections that should be i.Test Process 11. Scope control process included in any Master Service ii.Test environment 12. Change control process agreement are as follows: iii.Control processes 13. Sources and repositories for (Config, Release, code and information 1. Definition of the parties, defects etc) 14. Response times and turn- names, addresses, registered e. Test Scenarios around times (measured) numbers f. Test Cases 15. Assigned and named 2. Statement of the business of g. Test Reports resources each party, the intention of h. Release notes 16. Costs the relationship, what is being i. Defect analysis reports a. Fixed price, Fixed Fee, Open purchased by whom and j. Risk and risk mitigation Book, Time and Materials what is being supplied and reports b. Overtime by whom k. Entry, Exit and Suspend c. Capital and Consumable 3. Definitions and interpretations Criteria purchases, budget, of word and terms used in l. Metrics ownership the contract m. Reports d. Expenses, Travel etc 4. Appointment statement n. Tested code in source e. Bonus and penalties 5. Commencement and code control system 17. Acceptance criteria and duration statement2. Interim deliverables process 6. Duties of the supplier3. Key Milestones and overall 18. Any other term or condition 7. Duties of the purchaser schedule that requires definition in the 8. Fees and Fee model4. Definition of key processes master contract or service 9. overtime and expenses and references to agreement. 10. ownership of deliverables documented procedures and assets and policies 11. Hours of work and days and5. Roles and Responsibilities on hours the service is being both parties provided for, e.g. 24 by 7© Insight Test Services 2005 8
  9. 9. 12. Notice and Termination to the purchasers operations13. Effects of Termination ideally on site, there are the14. Accommodation and additional benefits of mutual due support diligence, relationship building,15. Confidentiality and getting ready to off shore.16. Intellectual Property17. Warranties The approach also is very flexible18. Limits of Liability and allows controlled ramp of19. Indemnity and Insurances activities to a near and/or far20. Force Majeur shore operation while21. Nature of agreement maintaining a local presence22. Entire agreement and delivery ownership while23. Waiver minimizing risks. Having the24. Severability supplier work directly with you on25. Notices your site is a critical success26. Non Compete factor in ensuring readiness to off27. Non Solicit shore, and adjusting the blend of28. No Partnership where activity is carried out can29. Governing jurisdiction and be designed to create maximum laws added value from the supplier.30. Signatures31. Witness The paper suggests that best32. Date practice outsourcing is as much about relationship development7.0 Conclusions as it is about good professional business practice. It is not aboutThis paper suggests that for the just creating rules and policingmost effective outsourcing of those rules but about creating ansoftware QA, Test and Validation extension of your organizationand for that matter any with a supplier partner who isoutsourcing of the development easy to work with and bringslife cycle that there is an additional competencies andemphasis on quickly getting the capabilities that create newpartner engaged in the competitive advantages andpurchasers business, with an value within your organization.emphasis on seeing the supplierpartner deliver early on in therelationship and doing that close© Insight Test Services 2005 9